PRENUPTIAL AGREEMENTS
PROTECTING YOUR ASSETS
Have you ever wondered what may happen to your property in the event that you and your partner split? If you answered no to this question, you’re not alone. When you are in love, considering your and your partner’s financial circumstances may not be the most romantic idea. However, entering into a Prenuptial Agreement can be the best way to protect your assets and other resources you have acquired prior to your relationship and avoid costly legal proceedings if your relationship were to end.
WHAT ARE PRENUPTIAL AGREEMENTS?
A prenup (pre-nuptial financial agreement) is a type of financial agreement which is governed by the Family Law Act 1975 (Cth) (‘Act’). A prenup details how some or all of your and your partner’s assets will be divided in the event that you separate.
By entering into a prenup, you are able to determine how your property is to be distributed in the event of separation. The purpose of doing this is to avoid being involved in costly and lengthy court proceedings in the unfortunate event of separation.
If you would like to enquire further regarding a prenuptial agreement, please do not hesitate to contact our experienced family law team.
WHO CAN ENTER INTO A PRENUP?
The Act permits heterosexual and same-sex couples to make legally binding agreements about their property. In the case of prenups, you are able to enter into a prenup:
- Before the commencement of a de-facto relationship
- During a de facto relationship
- Before marriage
WHAT IS INCLUDED IN A PRENUP?
Prenups deal with your separate assets, liabilities and financial resources (including superannuation) which is accrued prior to your relationship. Your prenup will also deal with the property you acquire during the relationship and provides for how this joint property will be allocated in the event of separation. Prenups can also govern what, if any, spousal maintenance is to be paid and other incidental issues specific to your relationship.
WHY SHOULD YOU ENTER INTO A PRENUP?
Entering into a prenup can be highly advantageous for you for the following reasons:
- You are able to protect your valuable assets (particularly important in circumstances where there is a large difference in income and/or assets between you and your partner)
- You are provided a level of flexibility because you and your partner can agree to change or cancel your agreement at any time
- You are given certainty and clarity in the event that your relationship were to end
- Your separation may be easier for both you and your partner as financial matters are finalised before separation which saves time and money (i.e. there is no dispute or need to go to court).
WHAT DO I NEED TO DO TO MAKE SURE MY PRENUP IS BINDING?
Prenups must meet specific legal requirements in order to be valid and binding. To ensure that your prenup is valid and binding, it should be prepared by an experienced family lawyer to ensure the terms comply with the strict technical requirements.
To ensure your prenup is binding, you must ensure:
- The agreement is signed by you and your partner in the presence of your respective lawyers
- You and your partner receive independent legal advice from separate lawyers prior to signing your prenup and the advice outlines to you the effect of the agreement on your rights as well as the advantages and disadvantages of the agreement
- Both legal advices are obtained from a solicitor who is currently admitted to practice in Australia
- A signed statement is given to you and your partner by your respective lawyers which confirms you each received independent legal advice.
If the above requirements are not met, then your prenup may not be binding and you risk your agreement being challenged and potentially set aside by the court.
OTHER CONSIDERATIONS
When entering into a prenup, you must also carefully consider the following factors (amongst others) to ensure your prenup is not set aside:
- Your agreement must not have been obtained by fraud (e.g. if you or your partner intentionally failed to disclose a financial matter, your agreement may be set aside)
- The legal and technical requirements were not met (i.e. if you or your partner did not receive independent legal advice, your agreement will not be binding)
- You or your partner were unreasonably pressured into the financial agreement (i.e. if you or your partner used the agreement as a bargaining tool to achieve an alternate purpose)
- Your agreement is impractical to fulfil (e.g. if you or your partner cannot practically carry out a term of the agreement).
The above examples are just some situations in which your prenup may be set aside. As a result, it is strongly recommended that if you are considering entering into prenup that you seek legal advice to ensure that:
- a prenup is right for you
- your agreement adheres to all technical and legal requirements
- your prenup is sufficiently detailed and accurately represents your intentions for how your and your partner’s property is to be distributed in the unfortunate event of separation (e.g. includes how your assets will be dispersed, who will be responsible for debts, what financial support will be available for you or your partner, and sufficiently discusses future or current children).
CONTACT A PRENUPTIAL LAWYER
If you require further information in relation to a prenup or wish to seek assistance in relation to the preparation of a prenup, we invite you to contact our Sydney or Gold Coast family law team by submitting an online enquiry or calling us on 1300 749 709.
